RSI International Systems Inc (CVE:RSY), which has developed a web-based property management system, announced that it has signed a binding letter of intent with predictive data and marketing company, nSight Inc, to sell RSI's RoomKeyPMS business and assets for US$4.6mln.
"We have been frustrated for some time with the quoted market value of RSI shares. The cash consideration being offered for the RoomKey business is about four times RSI's market capitalization based on the last closing price, and the funds available after we settle any liabilities will allow us to look at ways to better return value to our shareholders. This may include acquiring another business or distributing part or all of the net proceeds," said David Keys, chairman of the RSI board of directors and a representative for the Ernest W. Moody Revocable Trust, which holds 44.4% of RSI's outstanding shares.
Under the terms of the letter of intent, nSight will pay RSI US$4.6mln for the company's current business and assets related to the development and operation of RSI's RoomKeyPMS.
This figure will be adjusted to account for the timing of certain receivables, payables, deferred revenue, prepaid costs and other items that are assumed by nSight.
"We look forward to working with both the RoomKey team and customers as we build out a full portfolio of hospitality technology solutions. We expect to keep the RoomKey team largely intact, so that we can best serve the existing customers and grow the business," said nSight's chief executive officer, Rich Maradik.
"We see strong demand from the middle-market hotel segment for an innovative technology partner offering a fully integrated platform allowing for unified processes. This will allow customers using our technology to streamline costs while optimizing RevPAR [revenue per available room]."
With the letter of intent in place, RSI and nSight said they will work toward negotiating a definitive agreement within 60 days, to replace the binding letter of intent.
The definitive agreement will contain an RSI non-compete provision as well as a provision that RSI will not solicit any alternative transactions and that, should the company terminate the definitive agreement as the result of accepting a third party acquisition proposal, nSight will be entitled to a break fee of US$460,000.
The transaction is subject to a number of conditions, including completion of satisfactory due diligence, the entering into of definitive documentation and the receipt of all necessary regulatory and third party approvals and consents, including approval by RSI shareholders.
With the acquisition of RSI, nSight plans to assemble a portfolio of hospitality technology solutions to accelerate growth in the middle market hotel segment. Currently, nSight provides predictive data and marketing solutions for hotels and destinations.